PROBLEM
1.Zeus Company purchased equipment on January 1, 2007, at a cost of $180,000. The equipment is expected to have a useful life of four years or 10,000 units and have a residual value of $18,000. During 2007, the equipment produced 4,000 units.
Required:
Determine the depreciation expense for 2007 under the (a) straight-line, (b) double declining balance, and (c) units-of-production methods.
2.Rockledge Corporation purchased machinery on January 1, 2007 at a cost of $160,000. The machinery has an estimated useful life of 10 years and $30,000 residual value. Rockledge's income, before depreciation and income taxes, for 2007 was $300,000. If Stone has a 40% income tax rate, determine the amount of income tax expense and net income it will report, using the
a.straight-line method
b.double declining balance method